AEYE — AudioEye, Inc.

Summary of AudioEye's Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $10.6 million, an 8% increase year-over-year, marking the 41st consecutive quarter of record revenue.
• Annual Recurring Revenue (ARR): $41.2 million as of March 31, 2026, reflecting a 12% annualized sequential growth and an 11% year-over-year increase.
• Gross Profit: $8.3 million (78% of revenue), down from 80% in Q1 2025; adjusted gross margin at 84%, down from 85%.
• Operating Expenses: Increased to $10.1 million from $8.7 million year-over-year.
• Net Loss: $2.1 million ($0.17 per share), compared to a loss of $1.5 million ($0.12 per share) in Q1 2025.
• Adjusted EBITDA: $2.4 million (22% margin), up from $1.9 million (20% margin) in the prior year.
• Free Cash Flow: $1.9 million, improved by $500,000 from Q1 2025.
• Balance Sheet: Ended the quarter with $8.6 million in cash and $3 million available under a revolving line of credit; net debt of $8.4 million.

2. Strategic Updates and Business Highlights

• Leadership Transition: Kelly Georgevich has taken over as CEO, with David D. Moradi focusing on long-term strategy and product innovation.
• Product Development: Introduction of a next-generation platform that combines AI with custom fixes, enhancing customer risk management capabilities.
• Market Position: AudioEye holds over 127,000 customers, with strong performance in both enterprise and partner channels (41% and 59% of ARR, respectively).
• Regulatory Environment: The DOJ extended Title II web accessibility compliance deadlines by one year, providing additional time for engagement with state and local governments.

3. Forward Guidance and Outlook

• Q2 2026 Expectations: Revenue guidance between $10.65 million and $10.75 million; adjusted EBITDA expected between $2.6 million and $2.7 million (25% margin).
• Full Year 2026 Guidance: Revenue projected between $43.25 million and $44.25 million; adjusted EBITDA expected to be at least $12 million (27% margin).
• Long-term Goals: Targeting a $15 million run-rate adjusted EBITDA by year-end 2026, with anticipated sequential growth in the latter half of the year.

4. Bad News, Challenges, or Points of Concern

• Net Loss Increase: The company reported a larger net loss compared to the previous year, attributed to rising litigation expenses and increased operating costs.
• Customer Base Fluctuation: A decrease of 4,000 customers from December 31, 2025, due to a partner's realignment, although this did not materially affect revenue.
• Litigation Expenses: Increased litigation costs are a concern, with ongoing trials expected to impact financials.

5. Notable Q&A Insights

• Accessibility Trends: Management highlighted that the Internet is becoming less accessible, with a WebAIM study indicating a rise in detectable WCAG failures, contributing to increased litigation.
• AI Integration: Plans to leverage AI for product enhancements are underway, aiming to simplify processes and improve customer experience.
• Customer Compliance Readiness: The extended compliance deadline is seen as an opportunity to engage more partners and customers without changing the urgency of compliance efforts.
• European Market Development: Continued investment in the EU market is planned, with positive early signs despite bureaucratic delays.

This summary encapsulates the key points from AudioEye's Q1 2026 earnings call, highlighting both the achievements and challenges faced by the company as it navigates its growth trajectory.